In Focus

New CII Campaign Urges Companies to Adopt Majority-Vote Standards for Directors

CII has launched a new campaign to encourage companies in the Russell 3000 index to adopt majority-voting standards for director elections. While the overwhelming majority of large-cap companies elect directors by majority vote, thousands of smaller companies still use plurality voting.

CII kicked off the campaign with letters to 186 Russell 1000 companies with plurality voting standards (see sample letter here). CII also wrote to eight more companies in the Russell 1000 that use plurality voting within a dual-class system (sample letter). In the letters, CII Executive Director Ken Bertsch wrote that with plurality standards, uncontested directors can “win elections upon receiving one favorable vote”, a practice that is “inconsistent with CII members’ expectations for directors’ accountability to the company’s owners.” Companies with plurality standards that require a director who fails to win majority support to tender her resignation were not excluded from the mailing, since resignation policies do not have the same force as a majority standard.

Companies were selected using FactSet, a database for corporate governance factors. To see the list of companies that have received a letter from CII, click here. If you have any additional questions or comments, please contact CII Research Analyst Gabriel Morey at gabriel@cii.org.

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CII Priorities

Universal Proxy In contests, investors should be free to vote for the nominees they prefer.

Executive Compensation CEO pay should be transparent and tied to long-term performance.

Dual-Class Stock Each share of a public company's common stock should have one vote.

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